HSBC boss Noel Quinn writes letter to reassure Hong Kong shareholders after sharp three-day drop in stock price

HSBC chief executive Noel Quinn sent a letter to each of the bank’s shareholders in Hong Kong on Friday to explain the lender’s decision to cancel its dividend this week and reassure investors of its strong capital position.

The unusual step of writing directly to the bank’s shareholder base in the city came after a torrid three-day stretch that saw about US$15 billion shaved off the company’s market capitalisation after the bank cancelled its final interim dividend for 2019 and said it would not pay a dividend for at least the first three quarters of the year.

HSBC was one of seven banks and building societies based in the United Kingdom that agreed to cancel their dividends early on Wednesday and not to undertake any share buy-backs this year after a request from the Prudential Regulation Authority, a regulatory arm of the Bank of England.

Calling it a “sensible precautionary step”, the watchdog asked HSBC and the other banks to take the step on Tuesday night London time to ensure they would be able to continue to support the wider economy in light of the coronavirus pandemic, which has infected more than 1 million people worldwide and probably sent the global economy into a recession.

“We profoundly regret the impact this will have on you, your families and your businesses,” Quinn said in the one-page letter, which will also be posted on the bank’s investor website. “We are acutely aware of how important the dividend is to our shareholders in Hong Kong. We deeply value your support as a shareholder and we never take that for granted.”